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Shares I Love: Next

Next's logistics, data and technology set it apart from its competitors
Shares I Love: Next
  • Next stands apart from its competitors in terms of its leading logistics, data and technology
  • It continues to generate cash and has been one of the few high-street retailers to maintain its rent obligations

Callum Abbot, co-manager of JPMorgan Claverhouse Investment Trust (JCH), explains why he continues to be optimistic about retailer Next (NXT).

“The retail sector has always been competitive and the swift transition to online shopping in recent years has made it even more so. The pandemic has intensified and accelerated this pressure on retailers.

"To survive and thrive as a retailer, it is essential to have leading logistics, data and technology. In this regard, Next is an example of a company that continues to stand apart from its competitors. Its chief executive officer, Simon Wolfson, has consistently proved to be an excellent allocator of capital. During his tenure he has built a world class omnichannel retail offering while buying back over 60 per cent of the company’s shares.

"Throughout the pandemic, Next has consistently outperformed expectations. The information and analysis Next provides at trading updates have been a guide on how to run a company through a crisis. Next has continued to generate cash and has been one of the few high-street retailers to maintain its rent obligations. This should stand it in good stead when selecting the best sites for stores and give it increased leverage when negotiating renewals.

"Next still has a high-street presence, which remains an important part of its omnichannel offering. Shoppers still shop in stores, and physical shops showcase the range of products and increase convenience as hubs for click-and-collect online orders.

"Next also has a best-in-class online offering in terms of efficiency and customer interface. Simply put, it does all the unglamorous parts of retailing well.

"Today’s consumer expects a wide range of choice, priced attractively and at their convenience. Next ticks all those boxes and its management’s astute capital allocation will continue to drive value for shareholders for many years to come.”